MS-Yahoo merger may hit Googles mobile hopes

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MS-Yahoo merger may hit Google's mobile hopes

“A merged Microsoft-Yahoo could start to develop the kind of integration between platform and applications that is still only a gleam in Google's eye,” says analyst

Tuesday, February 05, 2008

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BANGALORE, INDIA: A merged Microsoft-Yahoo could exert a hefty counterweight to Google's mobile strategy, a leading analyst firm has said.

On the software side, Microsoft's mobile strategy has focused on the platform, through its Windows Mobile operating system.

Yahoo, on the hand, has focused on applications, including both individual applications such as Flickr, as well as its integrated suite 'Go'.

"A merged Microsoft-Yahoo could start to develop the kind of integration between platform and applications that is still only a gleam in Google's eye," commented John Delaney, principal analyst at Ovum.

"Yahoo and Microsoft also have a substantial combined user base in the three key mobile Internet applications: in particular, a commanding lead in messaging, where Google is weakest. And technical work to integrate these communities is already under way, with Microsoft and Yahoo having announced interoperability between their Messenger services in 2006," he added.

Microsoft and Yahoo have a track record of co-operation with the mobile operators in developing mobile Internet services, with numerous partnerships in place for several years for mobile access to their email and Messenger services.

Yahoo is also building a set of partnerships with operators in the embryonic area of mobile advertising, including AT&T in the US, and Vodafone and T-Mobile in the UK.

"As the mobile Internet develops, a co-operative relationship with the operators will be an important asset: the operators control data tariffing and in many markets they dominate the handset supply chain. It will be hard for any Internet portal player to achieve critical mass without favourable conditions in these two areas," Delaney added.

He further said that what users need with the Internet on their mobiles could be summarized in the phrase, "find things and places, and communicate with people." This, in turn, translates into three key applications: search, maps and messaging.

"So one route for success as a mobile Internet portal player would be to achieve a commanding share of usage for this group of applications, interworking them tightly with the phone's operating platform so that the applications are easy to use and can be integrated with phone functionality such as address books, content stores and telephony functions."

Google is starting to put some of this together, the analyst said. Its search engine works well as an independent service on mobile because of the simplicity of the interface, and the small of amount of data traffic it generates.

Google was also the search partner for some of the world's biggest mobile operators, most notably Vodafone and T-Mobile.

On maps, Google's Maps and Earth applications were gaining popularity as mobile services, although not yet with the same level of traction as search.

However, "messaging is the weakest link in the chain for Google, though its Gmail and Google Talk services are growing in popularity. And now, Google's Android initiative aims to provide the platform to underpin all these applications, to provide a compelling services environment for mobile users," Delaney further said.

Though the mobile Internet opportunity is certainly not the principal rationale for Microsoft's bid for Yahoo, he added that when looked at from the perspective of mobile, a merger between Microsoft and Yahoo would have "some persuasive logic to it, because the two players' mobile activities complement each other in some interesting respects."

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